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Fiscal stimulus was strong also in March

Quick Update

Budget tax revenues decreased slightly by 0.8% YoY in March 2019 mostly reflecting decline of excise (-38.3% YoY) and VAT tax revenues (-11.4% YoY). Flat tax revenues can be attributed to monthly volatility and some one-offs as underlying factors remained solid with turnover of VAT payers increasing by 12.6% YoY. Over the same period, total budget spending went up by 13.6% YoY with both current (+14.4% YoY) and capital spending (+10.5% YoY) increasing significantly.

As a result of accelerated spending and slower revenues growth, consolidated budget posted a deficit of 29.6 mln GEL in March 2019 compared to the surplus of 80 mln GEL an year ago. Change in budget balance amounted to 109.6 mln GEL – an estimated 3.5% of the same month GDP.

Wider budget deficit compared to previous year contributes to the acceleration of GDP growth in addition to sharp spending in December 2018 in the form of the advance payments with the strongest effect on the economy to be materialized likely from Q2 2019.